A couple of weeks ago I was asked to do a presentation on the current state of AI in the world of SME’s.
I stumbled across ChatGPT a week after its original release in November 2022, and was blown away by the potential. I have become an utter convert to the utility of AI, particularly for SME’s if they can organise themselves to make the necessary investment.
The scary thing is that I seem to know more about AI than 95% of the owners of SME’s, but by my own assessment, know so little that imposter syndrome is running rampant. Add to that the pace of change, every day, is enormous.
AI is here to stay, and represents the greatest opportunity, as well as the greatest threat to the profitability of SME businesses I have seen in my commercial life.
Following is an extended version of what I set out to say in the short time allocated. I also spoke from a few dot point notes, so it is probable that much of the below stayed unsaid.
AI is rapidly becoming as widespread and essential as the smartphone. Can you imagine not having your phone, and still being able to competitively service customers? Yet, you might see AI as just another tech buzzword, promising miracles but delivering disappointment. If that is your experience, you are in good company; small businesses often waste precious resources chasing shiny tech tools. However, AI is different. Here is how and why it evolved from a curiosity to an essential tool, and how you can adopt it smartly without breaking the bank or losing sleep.
Evolution of AI: From Hype to Helper
Artificial Intelligence is not brand new. It has quietly evolved from basic customer service chatbots to powerful, accessible tools capable of streamlining your daily operations. Think of AI like digital photography replacing film cameras. Kodak thought it impossible, but now everyone carries a powerful camera in their pocket, and Kodak is a shadow of its former self.
Why bother with AI?
AI won’t replace you, but someone using AI might. It is not about replacing your expertise; it’s about enhancing it. Think of AI as your diligent, tireless, whip smart but naïve intern, handling routine, repetitive tasks so you can focus on strategic, creative, and client-facing activities.
For example, imagine running a small retail business. AI can instantly analyse sales data, pinpoint trends, and forecast customer behaviour faster and more accurately than manual methods. Or if you are a consultant overwhelmed with admin work, AI tools can handle scheduling, invoicing, much of your marketing and routine communications, freeing you to concentrate on strategic growth and client relationships. It can also act as your mentor, advisor, and ‘red team’ devils advocate helping you make optimum choices more often.
Costs & Risks of AI: facing reality
You might assume AI is expensive. Not necessarily. Many AI solutions today are affordable or even free, offering powerful capabilities without heavy upfront investments. Tools like Perplexity for research, Google’s NotebookLM for knowledge management, and 11 Labs for professional-grade voice content offer free or cost-effective plans ideal for experimentation. When you consider the costs of subscriptions against the cost of people filling those roles, and as importantly, the opportunity costs that AI enables you to squeeze out, it is as cheap as chips.
However, caution is needed. AI, like a powerful sports car, is incredibly attractive, and extremely useful when used in the right way, with careful driving and clear boundaries. The three areas I worry about most are:
- Over-reliance and hallucinations: AI can confidently produce completely wrong outputs if unchecked, like that GPS driving you into a lake. However, as the tools become more sophisticated, the chance for hallucination becomes reduced, as hallucinations are largely the function of loose, ambiguous, and context free instructions.
- Loss of critical thinking: Blind trust in AI can erode your independent evaluation skills, just as calculators reduced the need for kids to learn the times tables, and computer programs eliminated the understanding built of complex mathematical tasks when using a slide-rule to do the calculations. (for anyone under 60, look up Slide-rule on Wikipedia)
- Security threats: Risks of intellectual property theft, fraud, and data breaches are real if proper precautions are not taken. The ‘pirates’ out there are at least as good as the best ‘goodies’ at leveraging the new tools to get into your pockets, and both are light years ahead of regulators. It really is the wild west, so you need to be hyper vigilant.
Mitigating AI risks
Stay vigilant and proactive. Treat AI like your powerful sports car, exciting and capable but requiring careful driving and clear guidelines. Protect your intellectual property, adopt robust cybersecurity practices, and always critically assess AI-driven recommendations.
Getting Started: Practical Steps for SMEs
Do not bet the farm before testing the market. Start small with a clearly defined business problem:
- Identify one task: Choose a simple, repetitive task consuming valuable time.
- Experiment: Use free or low-cost tools. Learn to develop effective prompts (the instructions you give AI) to get useful results.
- Process mapping and gradual deployment: Clearly outline your processes, identify where AI can assist, and slowly integrate it into your workflows using tools like Custom GPT’s in Chat GPT, or the equivalent on other platforms. The more you use them, the more you will see opportunities to take that extra step, and it becomes an exercise in continual learning and improvement. The more you break down processes into individual sequential actions, the easier it will become to automate them. As an aside, it also significantly enhances the value of your business in exit if a potential buyer sees a highly organised set of SOP’s on file, easily accessible, and readily improved and deployed.
- Focus. There are so many tools now, and more emerging every day, that nobody can reasonably be competent at one or two at the most. So, pick one that suits your businesses use case, and focus on being competent at that one, knowing that if it is overtaken functionally by another, your choice will soon catch up, and probably improve on rivals. The boundaries of what is possible are being pushed at an astonishing rate.
Helpful tools and resources
Here’s a curated selection of easy-to-use tools:
- ChatGPT. Custom GPT, projects, Canvas tools become a personal assistant.
- Perplexity: AI-powered research and insights.
- Google NotebookLM: Organise and analyse your information seamlessly. Free.
- 11 Labs: Create affordable, professional-quality audio content quickly.
- Suno.ai: Music and lyric generator.
- Luma2: Text to video, paid service, but affordable, and impressively powerful.
- Leonardo.ai: Image generator; easy and effective.
Real-world examples
Businesses like yours successfully use AI. Podcasts like Dan Sanchez’s “AI Driven Marketer” and Michael Stelzner’s “AI Explored” showcase relatable small business tools and case studies, highlighting measurable impacts from AI implementation. Influential voices like Rick Mulready, Andy Crestodina, and Rand Fishkin also contribute enormously to the ‘eco-system’ that will assist you to Figure out how to leverage AI tools for practical insights and actions.
AI’s future: Adapt or fall behind
AI will not replace small business owners, but businesses that leverage AI effectively will outpace those who ignore it. Ignoring AI today is like bringing a knife to a gunfight. AI is quickly becoming essential for competitiveness and efficiency.
Think of AI as your newest hire. Talented, scary smart, but inexperienced and naive. With proper training, patience, and clear guidance, this new “hire” can transform your business, freeing you to do strategic work only you can do.
Why not take a small step today? Choose one aspect of your business, pick an easy-to-use AI tool, and experience firsthand how AI can become your next competitive advantage.
Header cartoon: courtesy of Tom Gauld.
